The Gross State Domestic Product (GSDP) numbers of states might undergo a revision, Soumya Kanti Ghosh, Group Chief Economic Advisor of the State Bank of India (SBI), said on March 24.
This was part of a report by SBI’s Economic Research Department, authored by Ghosh.
The report underscored that the actual estimates of states’ GSDP for FY21 might see a 7 percent reduction if the numbers follow the Ministry of Statistics and Programme Implementation’s (MOSPI) estimates for the overall GDP.
At the all-India level, the National Statistical Office (NSO) has estimated an 8 percent contraction in real terms and 3.8 percent contraction in nominal terms for FY21.
The report, however, cautioned that there is a distinct possibility of the MOSPI revising the overall GDP estimates upwards, which means that states would not see this sharp downward reduction.
The FY21 actuals for certain states would not be this high and the next budget will show a downward revision in FY21 GSDP estimates.
States have also put forward their estimates for FY21. To validate the states’ GSDP estimates for FY21, we have created our own estimates based on the simulation of the last few years’ data, the report said.
The report found a “significant gap between our estimates and revised estimates provided by the states for FY21”. West Bengal, Uttar Pradesh, Madhya Pradesh, Karnataka and Tamil Nadu are some of them.
States like Rajasthan, Jharkhand, Odisha and Kerala are representing a more realistic picture of their economies, the report stated.
If we take the estimates given by states, the all-India GDP contraction would be significantly lower than what the NSO has projected. If we add the value of GDP estimated as per our simulation to the remaining states, for which we do not have the GSDP numbers, it would take India’s FY21 GDP to Rs 209.5 lakh crore, which means that India’s GDP will actually expand by an approximate 3 percent in nominal terms for FY21, as against the postulated 3.8 percent contraction by the NSO, it added.
The report said that while the states are showing a rosy picture on GSDP numbers, the same is not reflected in tax collections. It said that Karnataka, Madhya Pradesh and Uttar Pradesh have witnessed a revenue receipt de-growth from FY20 to FY21.
Meanwhile, West Bengal’s revenue receipts growth was just 1 percent.